Cutting carbon emissions at scale requires effective policy frameworks, underpinned by strong economic signals. ICC translates business experience into policy recommendations that strengthen market integrity, reduce fragmentation and carbon leakage risks, and support international cooperation.
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Putting a price on carbon creates clear incentives to reduce emissions and shift investments towards low-carbon solutions.
Today, more than 80 carbon taxes and emission trading systems are in place worldwide, covering around a quarter of global emissions.
But rapid expansion has led to fragmentation. A patchwork of national and regional rules and requirements increases costs and uncertainty for businesses operating across borders.
International cooperation is essential. Article 6 of the Paris Agreement provides a framework to link carbon markets, reduce fragmentation and mobilise investment while safeguarding environmental integrity.
Alongside compliance systems, voluntary carbon markets play a complementary role.
They allow companies to go beyond regulatory requirements and channel private finance into emission reduction and removal projects, particularly in emerging and developing economies.
ICC works with governments and international institutions to shape carbon pricing and carbon market frameworks that are aligned, predictable and grounded in business reality. This includes partnering with the Coalition to Grow Carbon Markets, a government-led initiative to strengthen high-integrity corporate demand for carbon credits. Through the Coalition and our wider engagement, we bring practical business insight to policy design to reduce fragmentation, address carbon leakage and ensure carbon strategies deliver real opportunity and climate impact.
ICC Environment and Energy Commission
Raelene Martin, Head –Sustainability
Sandra Hani, Head – Climate Policy
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Carbon pricing is a central instrument in comprehensive climate policy, helping governments reduce greenhouse gas emissions at the lowest possible cost and meet their Nationally Determined Contributions (NDCs). By increasing the cost of emissions, governments can help shift investment towards low-emissions and climate-resilient activities and help mobilise finance for mitigation and adaptation.
To be effective, the primary objective of carbon pricing should remain emissions reduction, supported by the development of sustained and robust carbon markets that reinforce price signals and expand abatement opportunities. When designing and implementing national approaches, governments can improve effectiveness and minimise risks related to carbon leakage by building on established guidance – such as the ICC Carbon Pricing Principles – and by promoting international cooperation and coordination.
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Achieving net-zero requires coordinated international action. Without alignment, divergent carbon pricing policies [CK1] risk fragmenting markets, increasing compliance costs. Such policy instruments should be designed with international alignment and interoperability in mind – taking into account impacts across jurisdictions and value chains.
Linking carbon compliance systems can reduce carbon leakage – instances where production and emissions shift to jurisdictions with weaker climate policies. To be effective and durable, however, any measures introduced to address carbon leakage need to be carefully designed, proportionate, and consistent with international trade rules, so that they do not create unnecessary distortions or provoke disputes. Well-aligned systems also make the business environment more predictable, because businesses face similar rules in different markets. Improved cooperation and coherence between these compliance systems, mechanisms under Article 6 of the Paris Agreement and high integrity voluntary carbon markets can enhance transparency and comparability. Strong international cooperation in this area therefore helps to avoid uneven policy outcomes that can undermine business competitiveness, increase administrative burdens, or lead to trade disputes.
Voluntary Carbon Markets (VCMs) can only scale if buyers and investors trust that carbon credits represent real, additional and verifiable emissions reductions. In practice, this means ensuring that projects genuinely deliver climate benefits, that information on credits is transparent, and that the rules governing their use are clear and predictable. Strengthening the integrity, transparency and legal certainty of the supply of credits is essential to build this trust.
Governments have an important role to play in creating these conditions. By establishing clear national frameworks and aligning them with the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles (CCP), they can help improve both project and credit quality. Measures such as endorsing robust standards, maintaining transparent registries, ensuring effective oversight and providing credible dispute-resolution mechanisms help reduce the risk of greenwashing and clarify how risks are shared. Together, these steps make carbon markets more predictable and credible, which in turn helps attract the long-term private investment needed to scale high-quality climate projects.
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While expanding the supply of high-quality credits is crucial, the effectiveness of Voluntary Carbon Markets also depends on strong and credible demand. Governments can play an important role by providing clear policy signals on how voluntary credits may be used and claimed by companies within corporate net-zero strategies – and by ensuring these approaches are consistent with national climate strategies and aligned with international best practice.
Governments should build on the work of existing international initiatives – such as the Voluntary Carbon Market Integrity Initiative (VCMI) Claims Code of Practice which provides guidance on credible corporate claims. Aligning national approaches with such frameworks can encourage greater, more credible private-sector participation in VCMs while ensuring that claims reflect genuine emission reductions. Greater clarity and consistency helps to reduce uncertainty, limits greenwashing and gives businesses the confidence to invest in high-quality climate projects over the long term.
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Seeking nominations for a new independent expert panel, which will develop guidelines and implementation steps for a global carbon emissions accounting system based on financial accounting principles.
A new independent expert panel will develop guidelines and implementation steps for a global carbon emissions accounting system based on financial accounting principles.
The permanent phase of the EU’s Carbon Border Adjustment Mechanism (CBAM) is set to begin on 1 January 2026, ending the current reporting-only period. businesses of all sizes across global value chains face continuing uncertainty as critical technical guidance remains unpublished. ICC calls for urgent clarity on the rules that will govern the definitive regime so businesses can plan effectively for 2026.
The science is clear. The 2023 synthesis report of the Intergovernmental Panel on Climate Change (IPCC) provided a critical pulse check indicating that current country nationally determined contributions (NDCs) remain highly insufficient to meet the Paris Agreement goals to limit global warming to 1.5 °C. In order to meet the collective goal of net zero emissions by 2050, greater action is needed globally to advance on the path set before us.
ICC is calling for stronger governance and transparency in voluntary carbon markets (VCMs), highlighting their critical role in reaching net-zero emissions by 2050. In a new report launched today, ICC emphasises the urgent need to scale VCMs as essential tools for emissions reduction and for channelling financial resources into climate action, particularly in vulnerable regions.
Since 2021, ICC has drawn on the experience of its global members to develop core principles and guidance for the effective design of carbon pricing instruments. In this third report, building on our past work, ICC provides guidance to governments and policymakers to address carbon leakage, promote linkage for greater international cooperation and make carbon pricing systems more efficient.
Rising climate change concerns are putting carbon pricing in the spotlight. As the year 2023 is on course to be the warmest year on record, carbon pricing is increasingly seen as a key tool to reduce carbon emissions. A carbon price sets a signal to market participants to either reduce their emissions or pay to […]
Multiple intersecting and compounding crises have made forthcoming climate negotiations in Sharm el-Sheikh in November 2022 the most challenging in recent history.
Based on a wide range of business experiences, ICC has developed the principles below which should be taken into account for developing market-based instruments under Article 6 of the Paris Agreement.
